IDC highlights areas to focus on to spur ICT growth in the Philippines

Adrian M. Reodique |
May 4, 2016

Even though the country’s momentum towards ICT adoption is on its upward track, the growth path maybe dwarfed by short-sighted and drastic strategies, says IDC.

The Philippine presidential election next Monday (9 May 2016) puts the country's ICT growth hanging in the balance, according to research firm International Data Corporation (IDC).

IDC said that despite the government ban on major ICT projects, vendors and service providers still get to work on projects relating to election and various spending measures. However, the election drives the end users, particularly the business sector, to a wait-and-see attitude toward IT spending.

The research firm also saw different ICT spending over the past two presidential elections in the Philippines.

In 2004, during the time of former President Gloria Macapagal-Arroyo, IDC noted that ICT spending grew by 12 percent. It reached a plateau of five to seven percent on the following years and rose by 15 percent growth in 2008.

Meanwhile, President Benigno "Noynoy" Aquino III succeeded Arroyo in 2010 and stopped most government projects as part of various check-and-balance exercise, resulting in a five percent ICT spending growth at the end of the year.

The ICT spending in the following two years reached a five to nine percent growth while a 27 percent growth was registered in 2013 on the back of government-led projects, fiscal reforms, and anti-corruption efforts which led to improvements in the international ratings and rankings of the country.

"This year, IDC expect the total ICT spending growth in the country to hover between eight percent to 10 percent. Barring any major wildcard events such as natural disasters, a worldwide recession and political revolution, IDC believes that the country's ICT sector is headed toward a positive ICT outlook at the end of 2016 and beyond," said Jubert Alberto, Country Head of IDC Philippines.

"Although there may be short-term uncertainties, the country's momentum toward ICT adoption is well on its upward track, brought on by the rise of millennials, disruptive technologies, the impact of the business process outsourcing (BPO) industry, demands from small and medium-sized enterprises (SMEs), and the impact of next-wave cities," he continued.

However, short-sighted and drastic strategies that will be seen only six to eight months after the elections may dwarf an ICT growth path, warned IDC. In line, ill-planned strategies can make the economy more vulnerable to external shocks. The radical policies and questionable methods may also result to instability and hit the domestic viability and investor confidence, said IDC.

As such, the research firm highlights the following areas on which the next administration should focus to spur growth in the country's ICT sector.

Prioritise the establishment of the Department of Information and Communications Technology (DICT). "This move is crucial for the government to ensure the ICT sector - which is among the most profitable divisions of the Philippine economy (projected to contribute US$50 billion in revenue in 2016) and one of the top drivers of employment growth - will be secure in the upcoming years. If these stage of priorities are created, DICT will be the primary government entity to plan, promote, and help develop the country's ICT sector and address issues concerning Internet connectivity, communications services, data privacy, cybersecurity, and cybercrime - functions that are currently divided among several disparate agencies," said Sean Paul Agapito, Associate Market Analyst in IDC Philippines.

Develop large-scale ICT initiatives. The Philippines, compared to other countries in ASEAN, is still waiting for large-scale initiatives that could greatly impact the ICT market. In essence, people must support local ICT vendor to help them gain a strong foothold and recognition in the local, regional and global scenes, said Alon Anthony Rejano, Associate Market Analyst in IDC Philippines.